New residential construction, especially for single-family homes, is slowing nationwide as more existing properties hit the market and economic headwinds persist.
Building departments across the country approved 1.4 million permits for privately owned, single-family and multifamily construction in June — a 4.4 percent drop compared to last year, according to data released Friday by the U.S. Census Bureau. However, June’s permits were 0.2 percent higher than those in May.
Approvals for single-family homes were down 3.7 percent from May and more than 8 percent from June 2024, driving much of the decrease in new permits. For buildings with at least five units, greenlit permits surged by 8 percent from the month before and 2 percent from June 2024.
Soaring construction costs and economic turbulence are underpinning some of the downturn in building activity.
Across all residential property types, permit approvals fell the most in the West year over year, plunging by about 9 percent. Single-family home approvals dropped by nearly 15 percent — also the largest drop among the country’s four main regions.
The Midwest was the only area where permit approval increased compared to last year. Approvals there were up 4.3 percent in June year over year and they were flat compared to May.
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In June, there were about 186,000 residential projects under construction in the Midwest, which was about 5 percent higher compared to the previous year and the highest annual growth rate among the country’s regions.
However, the South continued to dominate with the most number of projects in the midst of being built. Nearly half of the U.S. housing stock under construction was in the South in June.
Overall, there are roughly 13 percent fewer residential projects underway in the U.S. compared to the year prior, contributing to the country’s housing crunch.
As active listings for homes surge across the country, properties are lingering on the market longer. Economic uncertainty and high prices and mortgage rates are not helping to push buyers to ink deals.